In his theory, Elliott defined two types of waves: The impulse wave (which has a structure made up of 5 waves), and the corrective wave (which has a structure made up of 3 waves).

**The basic cycle** is comprised of 8 waves: The first 5 waves form an ascending "impulse" movement. The 3 sub-waves - a, b, and c - form a corrective wave.

This cycle is basically infinite, each wave can be comprised of one or more cycles of shorter durations.

**The complete cycle **is comprised of 34 waves: each wave can be split up according to the basic cycle. In the diagram, the main waves (1, 2, 3, 4 and 5) match the basic cycle. Afterwards, the trend reverses, with waves a and c being comprised of 5 impulse sub-waves and wave b being comprised of 3 corrective waves, because in Elliott theory, the cycle develops in the direction of the main trend.

## The strength of the waves and their duration

The cycles are comprised of a number of waves that are based on the famous number popularised by mathematician Leonardo Fibonacci, which allows one to define the strength of the waves as well as their duration. Depending on the period to which we are referring to, the complete cycle can contain, for example, 2, 8 or 34 waves.

**Calculating the Fibonacci sequence:**

Starting with the number 1, you add the previous number, as follows:

0+1=1, 1+1=2, 2+1=3, 3+2=5, 5+3=8, 8+5=13 ,13+8=21, 21+13=34, etc...

Elliott ranks the waves into 9 categories, which correspond with cycles that are more or less long-term. This system allows one to identify the position of a wave within the market's general progression, keeping in mind that it is difficult to identify waves in very short time periods.

**The cycles, from large to small are:**

Large supercycle, Supercycle, Cycle, Primary, Intermediary, Minor, Minute, Minuette, Subminuette.